Skip to content

News & opinion

16 JUL 2019

Q219 Tender Price Inflation

The early estimate for the BCIS All-in Tender Price Index (TPI) for 2nd quarter 2019 is based on a rise of 0.25% compared with the previous quarter*.

The estimate is the consensus of the BCIS TPI Panel** based on the analysed Delphi survey results. It does not necessarily represent the views of individual participants.

The resultant 2nd quarter figure shows a 4.3% increase in the year from 2nd quarter 2018***.

At least 60% of panel members reported differences in price movements between regions, sizes of projects, procurement routes and sectors.

Of the panel members, 60% reported M+E prices rising faster than building trades

The Panel also observed the following in the latest quarter:

  • Main contractors and trades are reviewing margins as the pipeline becomes less clear.
  • With margins tight, any increase in materials/commodity prices will affect tender prices or delivery.
  • Smaller (<£50m) contracts are competitive but there is a limited number of contractors for larger contracts, which is influencing procurement.
  • Single-stage procurement is generating keener pricing. Two-stage design and build often results in a premium, but this is the most acceptable route for large projects.
  • Increases in tendering prices in external facades and MEP and related trades (gas pipework, etc. due in part to sourcing outside the UK.
  • Commodity based materials are increasing.
  • Brexit uncertainty is producing stagnation in demand.
  • For the supply chain there is a potential upside and downside outcome around the value of sterling linked to a Brexit deal or no deal.
  • While contractors' pipelines remain generally strong there is increasing talk of emerging capacity. More Tier 1 contractors are actively seeking workload to fill their order books for next year.

* The BCIS TPI Panel estimate has been applied to the previous quarter index and rounded to the nearest whole number for publication.
** BCIS has recruited a panel of practising cost consultants from firms involved in multiple tenders in each quarter to provide an early estimate of tender price movement in the latest quarter based on a panel (Delphi) survey approach.
*** Basis of BCIS Tender Price Index. TPI figures prior to 4th quarter 2018 are based on project indices, generally single-stage, traditional procurement, average value < £5m, (minimum £100,000, no maximum). Excludes M+E and other specialist trades, e.g. facades. BCIS has assumed this reflects market projects let on single-stage design and build and specification and drawings. Indices are normalised for location, size and procurement. Percentage changes are mid-quarter to mid-quarter.